Kerala's Largest Maruti Suzuki Dealer Faces Probe Over Financial Irregularities

Kerala's Largest Maruti Suzuki Dealer Faces Probe Over Financial Irregularities

Introduction

The Kochi bench of the National Company Law Tribunal (NCLT) has directed the Ministry of Corporate Affairs (MCA) to initiate a detailed investigation into the affairs of Kerala-based Indus Motors Company, a leading Maruti Suzuki dealer in the state.

Factual Background

Indus Motors Company, led by Rajya Sabha member PV Abdul Wahab, faces serious allegations of fund diversion, unauthorized related party transactions, and corporate governance failures. The company has been accused of misusing its funds for personal gain and sidelining minority shareholders.

Procedural Background

A petition was filed in 2020 by four minority shareholders, TP Anilkumar, TP Ajithkumar, TP Sarada, and Anju Madhav, who together hold 20% of the company's shares. The NCLT examined the records and a forensic audit, finding acts of oppression and mismanagement.

Issues

The main issues raised in the petition include:

• Fund Diversion: Unauthorized use of company funds for personal gain.
• Related Party Transactions: Unauthorized transactions with related parties, including Wahab's relatives.
• Corporate Governance Failures: Failure to comply with corporate governance norms, including lack of transparency and accountability.

Contentions of the Parties

Minority Shareholders: The petitioners alleged that Wahab misused his position for personal gain and consistently sidelined minority shareholders.

PV Abdul Wahab: Wahab denied the allegations, arguing that the petition was time-barred and that the petitioners had approved the financial statements.

Reasoning and Analysis

The NCLT found that the company's investment in Aster DM Healthcare's IPO was an ultra vires act, and Wahab's personal ties with the company's promoter raised conflicts of interest. The tribunal also noted that Wahab continued as managing director despite crossing the statutory age limit of 70 without securing the required special resolution.

Implications

The NCLT's decision has significant implications for Indus Motors Company and its stakeholders. The investigation will examine the company's affairs from financial year 2011-12 onwards, and the administrator will oversee the company's governance until the probe is complete.

Relief Sought

The petitioners sought a forensic audit, restitution of losses, removal of the Wahab family from management, and a declaration that the company was being falsely portrayed as part of the Bridgeway/Peeves Group.